Backblaze(BLZE)2024-11-09 17:17Financial Data and Key Metrics Changes - Revenue for Q3 2024 was 16.2 million, reflecting a 39% increase year-over-year [22] - Adjusted EBITDA margin reached 12%, the highest since going public, compared to a negative 3% in the prior year [24] - Net Revenue Retention (NRR) improved to 118% from 108% year-over-year, while gross customer retention was 90% [23] Business Line Data and Key Metrics Changes - B2 Cloud Storage showed strong growth at 39%, although it was lower than expected due to early churn and large deals closing later in the quarter [22][8] - Computer Backup revenue totaled 0.5 million [17] Company Strategy and Development Direction - The company is focusing on two major initiatives: driving revenue growth, particularly in B2 Cloud Storage, and achieving cost efficiencies [8] - A go-to-market transformation is underway, emphasizing upskilling, partnerships, and streamlined sales plays to enhance sales productivity [12][13] - The company aims to become a Rule of 40 company over time, balancing revenue growth and free cash flow margin [14][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture the 8 million [21] - The company is on track to end the year with at least $20 million in cash, with significant improvements in cash flow from operations [25][27] Q&A Session Summary Question: Discussion on B2 churn and NRR improvement - Management noted that churn occurred earlier in the quarter than expected, but strong NRR and gross retention were still achieved [32] Question: Upmarket potential for B2 - Management indicated no specific limit to how far B2 can go, with significant storage capacity already in place and recent large deals signed [34] Question: Revenue growth expectations post-price increase - Management expects B2 revenue growth to accelerate after the price increase lapses, with leading indicators suggesting positive momentum [41] Question: Details on workforce reduction - The 12% workforce reduction was part of a zero-based budgeting exercise, with cuts made across various departments, particularly in marketing [43] Question: Gross margin outlook with new data center investment - Management does not anticipate a significant impact on gross margin from the new data center, as it involves colocation and leased hardware [53] Question: Quality of the sales pipeline post-Jason's arrival - Management confirmed that the quality and size of the sales pipeline have improved under the new leadership, with more rigorous controls implemented [54] Question: Sales team expansion amidst cost efficiency initiatives - Management plans to reinvest savings from cost reductions into expanding the sales team to enhance revenue generation [58]